Bausch equity up, bonds down on spinoff news; Bombardier and W&T Offshore bonds strengthen after 2Q earnings releases – Mid-Day Commentary

Bausch Health’s equity shot up this morning after the company announced plans to spin off its eye-care business from its core pharmaceutical operations. Meanwhile, Bausch’s debt softened today as investors look for clarity on which debt will travel with the spin-off, sources said.

The eye-care unit, Bausch & Lomb, generated USD 3.7bn in revenue last year, compared to USD 4.9bn from the rest of the company. CEO Joseph Papa said the spinoff could happen within the next 18 months. 

Bausch’s USD 1.25bn 5.25% senior unsecured notes due 2030 traded today at 102.25 to yield 4.841%, down from trades at 104 to yield 4.531% yesterday (5 August), according to MarketAxess.  

Common shares for the company traded as high as USD 22.63 per share this morning, before settling at USD 20.87 per share and a market cap of USD 7.33bn, up 7.25% from yesterday’s close.

Bombardier’s bonds ticked up today after the plane manufacturer disclosed that it aims to double deliveries of its flagship business jet in the second half of 2020 and break even on cash flow for the year, although the company missed EBITDA expectations for 2Q.  

The company expects to double the deliveries as it becomes a pure-play business jet maker with the impending closings of its rail and aerostructures asset sales.

During the quarter, the company posted negative USD 319m of EBITDA, compared to analyst expectations of positive USD 39.33m. The drop was due to a USD 435m charge in its tail business related to costs for several late-stage projects in the UK and Germany.

Bombardier’s USD 1.25bn 6.125% senior unsecured notes due 2023 traded today at 88.25 to yield 11.823%, compared to trades on 4 August at 86.5 to yield 12.725%, according to MarketAxess. The USD 1.2bn 6% senior unsecured notes due 2022 traded at 90.5 to yield 11.009% today from trades at 89.5 to yield 11.548% on 4 August.

Endo’s debt nudged up this morning after the pharmaceutical company reported 2Q20 earnings yesterday evening showing a roughly 3.2% increase in year-over-year adjusted EBITDA for the quarter. The issuer reported 2Q20 adjusted EBITDA at USD 336.48m compared to USD 326.08m in 2Q19 while its revenue slid 2% to USD 688m from USD 700m in 2Q19.

Its USD 1.2bn 6% notes due 2028 ticked up to 76 yielding 10.553% this morning from 75.75 on 4 August while the USD 940.6m 9.5% notes due 2027 changed hands at 108.25 for a 7.739% from 108 yesterday (5 August), according to MarketAxess.  

W&T Offshore bonds also gained after the Gulf Coast producer reported 2Q20 earnings yesterday, showing a 20% production jump year-over-year to 42,037 Boe/d, with 48% comprised of liquids. 

Its USD 597.5m 9.75% notes due 2023 traded at 70.5 yesterday, up from 68.75 on 4 August and 66.55 on 28 July, according to MarketAxess. 

However, the higher output was partially offset by lower commodity prices. Its quarterly adjusted EBITDA slumped 44% year-over-year to USD 42.1m, while revenue plunged 59% YoY to USD 55.2m. 

To preserve balance sheet flexibility, the company slashed its 2020 capital budget by USD 10m, to USD 15m, and projected 3Q20 volumes to be impacted by certain well shut-ins due to low commodity prices. 

Travelport’s loan moved up a point this morning after the company released cleansing documents and proposed a new financing transaction, as reported

The debt, a roughly USD 1.77bn super priority term loan, would be issued at “TP Tech,” and consists of a USD 1.05bn roll-up and a USD 500m new money term loan. The proposal comes after the company entered into a standstill agreement with its lender group last month. 

In the new financing, lenders would provide the new money portion, broken up into USD 220m provided up front and a USD 280m delayed draw. Pricing on the eight-year facility is pegged at Libor+ 800bps. 

The borrower’s USD 2.8bn L+ 500bps TL due 2026 is quoted at 62.536/64.607 today, up from 61.792/63.875 yesterday, according to Markit.

2020 Debtwire

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